U.S. · Tax forms
Form 4684 line 27, business casualty loss per property.
How Section B turns basis, value drop and insurance into a deductible loss for each item.
Line 27 (“Subtract line 21 from line 26. If zero or less, enter -0-”) gives the casualty or theft loss for each item of business or income-producing property in Section B, Part I. Line 26 is the smaller of the property's basis (line 20) or its drop in value (line 25); line 21 is insurance or other reimbursement.
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What the 2025 Form 4684 says
| Item | Meaning | What the IRS says |
|---|---|---|
| Line 20 | Cost or adjusted basis | Original cost plus improvements, minus depreciation allowed or allowable (including any section 179 deduction), amortization, depletion, etc. |
| Line 21 | Insurance or other reimbursement | See the instructions for line 3: enter the amount received or expected to be received, whether or not you file a claim |
| Line 22 | Gain case | The form says that if line 21 is more than line 20, enter the difference here and skip lines 23 through 27 for that column |
| Lines 23 and 24 | Fair market value | Fair market value before and after the casualty or theft; see the instructions for lines 5 and 6 |
| Line 25 | Drop in value | Subtract line 24 from line 23 |
| Line 26 | Smaller of 20 or 25 | If the property was totally destroyed by casualty or lost from theft, enter the amount from line 20 |
| Line 27 | Subtract line 21 from 26 | If zero or less, enter -0- |
| Line 28 | Total | Casualty or theft loss: add the amounts on line 27 and enter the total here and on line 29 or line 34 |
| Home used for business | Form 8829 | Enter on line 27 the deductible loss from Form 8829, line 35, and “See Form 8829” above line 27; for a rented home, see section 280A(c)(5) and write “See attached statement” above line 27 |
Each item on its own
The instructions say a business or income-producing property loss must be figured separately for each item. Unlike personal-use real estate, where improvements are treated as one item, a building and the trees on the same lot are measured separately.
Reimbursement counts even if you do not claim it
Line 21 includes insurance you could have claimed. The instructions' line 3 example has a $2,000 car destroyed with a $500 deductible and no claim filed, so $1,500 is entered.
Where line 28 goes
Line 28 totals line 27. You allocate the total between line 29 (property held 1 year or less) and line 34 (property held more than 1 year) based on how long you held each item.
Employee property is out
The instructions say business casualty and theft losses of property used in performing services as an employee cannot be deducted or applied in the netting process, because miscellaneous itemized deductions are no longer allowed.
Worked example
A storm damages a machine with an adjusted basis of $9,000. Its fair market value was $7,000 before and $2,000 after, so line 25 is $5,000. Line 26 is the smaller of $9,000 and $5,000, which is $5,000. Insurance pays $3,500, so line 27 is $5,000 less $3,500, or $1,500. For a second item with a basis of $800 and insurance of $1,000, line 22 shows a $200 gain and lines 23 through 27 are skipped. Names and figures are made up.
More line pages in this set
Related lines: Form 4797 Line 6, Form 4797 Line 10.
Sources
- Instructions for Form 4684 (2025): the line-by-line instructions on this page. Page last reviewed or updated April 30, 2026. Read November 2, 2026.
- Form 4684, Casualties and Thefts (2025): the printed line wording and arithmetic on the form. Read November 2, 2026.
Tax year 2025 form and instructions. Line labels were read from the IRS PDF posted on the date read; line numbers, dollar limits and cutoff years change between editions, so check them against the form for your tax year. This page covers Section B only; personal-use property is Section A with different limits. Names in worked examples are made up.
Frequently asked questions
What is Form 4684 line 27?
The loss for each property in Section B, Part I: line 26 minus line 21, not below zero.
Why do I use the smaller of basis or value drop?
Line 26 is the smaller of line 20 (basis) and line 25 (drop in value). If the property was totally destroyed or stolen, line 26 is line 20.
Do I subtract insurance I did not claim?
Yes. Line 21 includes insurance or other reimbursement whether or not you filed a claim.
Where does line 27 total go?
Line 28 adds line 27 and sends the total to line 29 or line 34.
What about a home I use for business?
Complete lines 19 through 26, then enter the deductible loss from Form 8829, line 35, on line 27 if you file Schedule C and use Form 8829.
Not tax advice
This page summarizes IRS instructions, mostly written for the people who prepare the form, and is not tax, legal or financial advice. A CPA or an enrolled agent can confirm what a line means for your return. Everything runs in your browser; nothing you enter is sent anywhere.